Tasks of ERP selection

First of all, companies are faced with the question of which tasks should be actually worked off within ERP selection. The result of an ERP selection usually is an agreement with the future ERP supplier which settles terms and conditions for the licensing of the ERP software, the implementation (consultancy agreement) and the maintenance services. In terms of the consultancy agreement it is also necessary to plan the ERP implementation project. This mainly concerns the amount of customisation of the ERP software which is necessary to fix important project milestones and the definition of the project team.

All said and done, ERP selection is an investment project!

However, it does have certain peculiarities, as extensive cost-benefit analyses of ERP software projects show: Much of the benefit just cannot be quantified and this renders ERP software implementation a risky investment. Most companies react to this fact by starting an ERP project only when there is urgent need for action. This is comprehensible - however, the resulting urgency induces many companies to hasten their ERP software implementation without prior business process analysis and without keeping to a profound selection method - this often takes a high toll.

Apart from benefit analyses, ERP selection is meant to find a suitable ERP software and a competent ERP vendor who supplies, implements and maintains the software at a fair price.

In accordance with any other investment plan, the following tasks must be coped with in order to reach this objective:

Specification of ERP Software Requirements

Ultimately, ERP software is a tool which supports the company’s business processes. Under consideration of the project objects, the technological conditions (e.g. IT strategy) and the planned application area of the ERP software, the requirements are deduced from the business processes and information flows and recorded in a requirement specification sheet. For many ERP software projects this calls for a preceding process analysis whose appropriate range and level of detail may vary considerably.

Sounding the ERP Software Market

Especially from the point of view of middle sized companies the ERP software market is fairly versatile. In Germany, for example, there are more than 600 ERP products supplied by far more than 500 vendors. If one adds the different industry variants of well-known ERP software products (e.g. mySAP or Microsoft Dynamics) the number of different ERP software packages increases to about 1.600. The intensive examination of only a couple of ERP software products therefore presupposes a short-listing of possible candidates. Specialised trade fairs and other events as well as vendor indexes (print and online) can serve as starting-points for this tasks.

Tendering the ERP Project and Comparing Quotes

Within the tendering process the company’s requirements are submitted to the eligible vendors and - if need be - explained. Usually, the ERP software vendors comment the tender by their individual solution proposals. In the course of this they often also estimate required customisation programming and include it in their preliminary quotes.

Detailed Requirement Specification and Contract Negotiations

The end of the ERP selection process is marked by the contract negotiations with one or up to three vendors. More complex ERP software projects usually require a more detailed description of the company-specific demands for customisation, without which the vendor cannot calculate the programming and consulting expenses. Often in this phase, the agreement is also examined from a legal point of view and the financing of the project is settled in cooperation with banks or leasing companies.